Coca-Cola: Goldman Sachs Is Manipulating Metals Prices

A group of firms including Coca-Cola has alleged that Goldman
Sachs is manipulating the metals market by only releasing metals
that it holds in certain amounts, which artificially inflates
prices, according to the
WSJ, via
Huffington Post.

In the past few years, Goldman (and other banks) have bought up
metals warehouses, which allows them to determine how much metal
they release to customers and when they do it.

Now the London Metals Exchange is looking into accusations that
this not only allows Goldman to inflate prices, but that
Goldman's action does inflate prices.

According to the
WSJ, "aluminum users and market traders... say operators of
warehouses, which also include J.P. Morgan Chase & Co. and
Glencore International PLC, should be forced to allow the metal
out more quickly to meet demand."

The complaining companies single out Goldman as the worst
offender. (On a similar note, Goldman was recently fined for
manipulating the oil market.)

Goldman owns the biggest warehouse complex in the LME system.
It's located in Detroit.

And Coca-Cola and the other angry users say Goldman "in
particular is allowing the minimum amount of aluminum allowed
by the LME—1,500 metric tons a day—to leave its facilities, and
that [Goldman] could remove much more, erasing supply bottlenecks
and lowering premiums for physical delivery in the process."

Since Goldman bought the complex, "the wait time for aluminum
delivery in Detroit has jumped to to about seven months,"
according to the
WSJ.

According to to Coco-Cola's strategic procurement manager, Dave
Smith, "It takes two weeks to put aluminum in, and six months to
get it out... The situation has been organized artificially
to drive premiums up."